The Risk-Free Rate Is 3

question 10

Multiple Choice

The risk-free rate is 3.4 percent and the expected return on the market is 10.8 percent.Stock A has a beta of 1.18.For a given year,stock A returned 13.6 percent while the market returned 11.8 percent.The systematic portion of the unexpected return was ________ percent and the unsystematic portion was ________ percent.

• A) 1.045; 0.207
• B) 1.145; 0.126
• C) 1.180; 0.288
• D) 1.344; 1.443
• E) 1.500; 1.449

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Definitions:

Differentially Permeable Membrane

A membrane that selectively allows certain substances to pass through it while keeping others out.

Concentration Difference

The variation in the amount of a substance in two areas, which can lead to diffusion, where substances move from an area of high concentration to one of lower concentration.

Selectively Permeable

Property of the plasma membrane that allows some substances to pass, but prohibits the movement of others.

Osmosis

The movement of water across a semipermeable membrane from an area of lower solute concentration to an area of higher solute concentration.